News Summary
In an effort to address housing development concerns, California lawmakers have proposed significant changes to Measure ULA, the mansion tax. Co-authored by state Senator Lena Gonzalez and Assemblymember Tina McKinnor, the proposed revisions aim to amend existing provisions criticized for their negative impact on housing production. Supporters argue that current tax rates have hindered housing construction, leading to affordability issues in Los Angeles. The revisions include reducing tax rates for certain properties and providing exemptions for affected homeowners, all while navigating tensions between various stakeholders.
Los Angeles – Lawmakers in Sacramento have proposed a significant overhaul of Measure ULA, commonly referred to as the mansion tax, aimed at addressing concerns regarding housing development in the city. The bill, co-authored by state Senator Lena Gonzalez and Assemblymember Tina McKinnor, seeks to amend provisions of Measure ULA that have been criticized for their negative impact on housing production.
The proposal is a strategic maneuver to prevent a tax cut measure from the Howard Jarvis Taxpayer Association from reaching the ballot in the upcoming elections. If this opposing measure is successful, changes to Measure ULA, governed by Senate Bill 423, will not be enacted.
Measure ULA was originally passed by Los Angeles voters in 2022 and has since generated over $800 million aimed at funding programs focused on homelessness prevention and affordable housing development. Under its current provisions, the measure imposes taxes of 4% on property sales over $5 million and 5.5% on properties exceeding $10 million. However, critics assert that these tax rates have led to a significant slowdown in housing construction and worsened affordability issues in the already strained Los Angeles housing market.
In their revision, lawmakers intend to remove specific aspects of Measure ULA deemed detrimental to housing production in Los Angeles. The proposed changes under SB 423 would significantly reduce the tax burden for sellers of apartment buildings, offices, and shopping centers that were built in the last 15 years, adjusting the tax rate for these properties to 1.5% from the current ULA rates.
Supporters of the overhaul argue that the original measure was marketed misleadingly, suggesting it would mainly target luxury homes, yet has negatively affected multi-family developments crucial for addressing the housing crisis. Some have pointed out that Measure ULA has been correlated with a decline in housing transactions and development activity, raising concerns about its overall effectiveness.
While backers of Measure ULA feel that an assessment of its impact on housing is premature—citing recent rising interest rates as a significant deterrent to development—opponents of the proposed changes contend they could diminish revenue by 15% to 30% for programs designed to enhance housing affordability.
Amid a backdrop of concerns regarding the distribution and utilization of ULA funds—which have faced significant delays—lawmakers are also proposing provisions that would exempt property sales from homeowners affected by the recent Palisades fire from ULA taxes for five years. Additionally, the bill includes technical changes aimed at assisting affordable housing developers in obtaining bank loans.
The tensions surrounding Measure ULA have drawn attention from various stakeholders. Former Assembly Speaker Bob Hertzberg, who is advocating for the proposed changes, has stated that the overhaul is crucial to stimulate economic growth and encourage housing development in Los Angeles. On the contrary, the Howard Jarvis Taxpayers Association has described SB 423 as a strategic endeavor to undermine its ballot measure seeking to repeal Measure ULA altogether.
Proponents of ULA have expressed concerns that the proposed modifications could result in a reversal of voter intentions, undermining the progress made since the measure’s passing. As discussions continue in Sacramento, Assemblymember Mark Gonzalez has defended the proposed changes as necessary to enhance the measure’s effectiveness, promoting a legacy of utilizing ULA funds for housing improvements.
As the proposal advances, it will be crucial for lawmakers to strike a balance that addresses both the need for an effective response to homelessness and the imperative of bolstering housing development in Los Angeles, a city grappling with one of the worst housing crises in the country.
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Additional Resources
- Los Angeles Times: Measure ULA Bill
- Daily News: UCLA Study on Measure ULA
- LAist: Mansion Tax Measure ULA Reform
- Wikipedia: Housing Crisis in the United States
- CityWatch LA: Measure ULA Under Fire
- Google Search: Mansion Tax
Author: STAFF HERE HOLLYWOOD
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